10/13/25 Notes

Question 1

Answer 1

Question 2

Answer 2

1) ordinary loss excludes seperately stated pass through items (interest, section 1231, municipal, charitable, life insurance). Its Just sales- ordinary expenses

2) Start calculation of Basis from FMV of basis and not cost basis. Add % share of NI, Increase in share of debt, and decrease for distributions.

Question 3

Answer 3

1) Look at the K-1s for passive income, not the portfolio income. The K-1s had a 1700 passive income and a 2400 passive loss, so a total of 1700 passive income can be offset by passive loss
2) Total rental real estate loss was 27300, but only 25k is the limit for the deduction, phased out by the rule 100k-150k (divided by 2).
3) Investment income was 3900, you calculated that in problem 1, which can be offset by the 5k investment expense.